Splitting Up
Without Losing Out
A Professional Valuation Is Key?
As a business owner, you already
understand the importance of business valuations. Knowing proper
values for your business assets smoothes transitions, sales and
liquidations. Unfortunately, many business owners neglect to obtain
a professional valuation when preparing to divorce their spouses.
Because emotions are typically negative - anxiety, anger and
mistrust - one spouse may suspect that the other is hiding or
undervaluing significant assets in an attempt to keep them out of
the divorce settlement. This suspicion often arises when a
family-owned business is at stake.
Divorce is never easy. But, as a business owner involved in a
divorce, you can take steps to make the marriage dissolution as
painless as possible. The first step is consulting a reliable,
impartial, experienced valuator. The next step is preparing and
educating yourself about the ins and outs of valuing assets for
divorce purposes.
Key Points
of Divorce-Related Valuations
Keep in mind that each
state has its own laws and legal precedents in divorce cases. Your
valuator should understand how these laws affect the valuation
process, but consulting an attorney is also essential. Beyond state
law and precedent, other characteristics differentiate
divorce-related business valuations from others. Let's take a
closer look at these points and their implications for the valuation
of your business.
Marital property: This is
property you acquired during your marriage, regardless of how title
is held. But marital property usually excludes property you or your
spouse acquired before the marriage or through gift or inheritance
during the marriage.
Equitable Distribution:
This assumes joint and equal ownership of marital
property acquired while you were married.
The valuation date.
This can be: 1) the date of separation, 2) the date
of the divorce filing or 3) the date of the divorce. Make sure that
the valuation date is fixed at the start of the valuation
engagement. Otherwise, date discrepancies may invalidate the
valuation.
The standard of value.
The standard of value can be a minefield. One
unique aspect of finding value for a divorce settlement is that the
valuator is typically not seeking the business's investment value.
Because the business usually isn't going to be sold, its value to a
specific buyer isn't particularly relevant. Although many of
the considerations are the same as for the determining sale value,
some substantial differences exist. As with the valuation
date, all parties should agree on the standard of value at the start
of the process. In Florida personal goodwill is not a Marital asset.
